David Dauch: Well, clearly, anytime you have a program adjustment, whether it’s ICE or hybrid or EV and investments are being made and volumes aren’t being realized or programs are being delayed. There’s commercial discussions that need to take place — those are taking place with all the OEMs or all the suppliers that have made investments to support the OEMs, especially as they’re adjusting some of those timings AAM is not excluded from those discussions. So we’re in discussion with our different OEMs, just trying to better understand our long range product plans, understand the timing and the rescoping of the programs and then understanding the impact that it may have on the business cases and the plans that we put together, obviously, where we can redeploy assets if need be or reallocate those assets to other business, we’ll do that between ICE, hybrid and an EV.
But at the same time, with there’s some investment in regards to some of the R&D activity that’s taking place, we’ll need to make sure we’re recovering appropriately. So that’s what I’d say, I guess.
Tom Narayan: Okay. And then a lot of folks are thinking that 2024 could be a year of M&A in the auto space. You have volumes not necessarily growing that much. But counter to that would be obviously high financing costs. You guys do have a little bit of leverage, but just curious as to your guys’ appetite to where it’s being maybe acquisitive in ’24?
David Dauch: Well, we’ve said all along that we want to be a consolidator, and we actually started that activity back in 2017 with the acquisition of MPG. We’ve also done some other tactical acquisitions since that time, the latest one being the Tekfor acquisition that we did last year. We’ll continue to look at, what I’ll call, tactical M&A right now that we can operate within our current capital structure. But if there’s other opportunities that make business sense for us that ultimately strengthened the company going forward and position us as an organization going forward. We’ll look at those opportunities as well, and we got a fiduciary responsibility to do those types of things. So we’ll definitely keep M&A on our radar screen.
Tom Narayan: Okay. Now if I could sneak one final one. Sorry, David. Chinese OEMs potentially entering Europe and obviously, Europe but then maybe even producing locally in the US. Just curious as to how you guys think about this as something a customer subset that maybe you’re underexposed to, could you easily pivot to more Chinese OEM exposure, should this happen? Thanks.
David Dauch: Well, the good news is we’re growing our China business, especially on the electrification and the PHEV side of the business. They’re becoming global OEMs. They’re clearly on the offensive that where before they were looking at just satisfying their demand within country of China, but they’re obviously attacking our position themselves in Europe very aggressively right now in Mexico. And there’s no doubt, it’s just a matter of time before they come strong to the US. But obviously, I think a lot of countries are going to have to look at what mechanisms that they need to put into place to protect some of their businesses, meaning the automotive businesses whether that’s tariffs or other types of things to level the playing field.
But ultimately, it means game on. And the low-cost producer that can produce the quality product that the consumer desires is going to win in the long run. So it’s just going to elevate the game of every one of the OEMs and technology will be a differentiator as we go forward. But the Chinese have vertically integrated the BEV side of the business. But I also think it’s important to point out a couple of things is I don’t think BEVs are going to make up 100% of the volume on a global basis anytime soon. So ICE and hybrid and even hydrogen, all play a meaningful role going forward. I also think in Europe, the luxury cars are pretty well dominated by the Europeans. So that’s a tough market to crack because of the performance that goes with that.
And that same thing holds true here in North America from a truck and SUV and crossover standpoint, but especially truck and SUV, there’s very loyal buyers in those areas. So they’re new entrants, a growing entrant, and they’re going to gain market share. But at the same time, it’s an opportunity for companies like us and other suppliers.
Tom Narayan: Got it. Thanks so much guys.
David Dauch: Thanks, Tom.
David Lim: Jamie, I think that was our last question.
Operator: Ladies and gentlemen, that was our last question. I’d like to turn the floor back over to you, Mr. Lim for any closing remarks.
David Lim: Okay. Thank you, and we thank all of you who have participated on this call and appreciate your interest in AAM. We certainly look forward to talking with you in the future. Thanks.
Operator: Ladies and gentlemen, that will conclude today’s conference call and presentation. We do thank you for joining. You may now disconnect your lines.
